Small Illinois Bank Borrows a Page From Deere on Equipment Leasing

Illinois banker James R. Shafer doesn't begrudge John Deere's success in equipment financing. He emulates it.

His First National Bank in Tremont works through independent dealers that don't have access to financing divisions, like John Deere's, that compete with commercial banks.

Since January, the $32 million-asset bank has garnered almost $300,000 in new leases.

"In one way it's a defensive mechanism," said Mr. Shafer, chief executive. "But I felt it was an aggressive new product mechanism."

The approach lets the bank in on what he sees as the biggest advantage enjoyed by equipment companies such as Deere's John Deere Credit: the convenience of being at the point of sale.

First National focuses on leasing smaller equipment, including plows and planters, as well as used equipment. It also has increased financing on outright purchases.

Similarly, the bank has financed seed purchases through several seed dealers for three years, he said.

Farm loans, which make up about a fourth of First National's portfolio, are a focus Mr. Shafer intends to keep.

"Lending has become everybody's ball game," he said. "Farmers seem to be a ripe market. Where are those lenders going to be during the next downturn? I'm going to be there."